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21 Sep 2014

What Do Internet Outages Cost Your Company?

By Brian Brandon

outage_2

Here at vUnity, we talk a lot about how few outages we have. But why does that matter? How do internet outages affect your business, anyway?

Well, a quarter of business owners report that their business shuts down completely when their internet goes out. And even if you stay up, things can go south in many other ways. And these can run up all kinds of costs, both countable and not.

Let’s look at some of them.

Calculating the Costs

Most outages occur in the middle of the night for scheduled maintenance. These are annoying, especially if you weren’t expecting them, but they’re not the worst ones. Chances are your customers are in the same country as you, so unless your business is massive, it’s not likely that many of them will be buying at two in the morning.

So, for the purposes of this article, we’ll focus on the ones that make up the exception, not the rule. The outages you truly have to worry about are the ones that occur during the day, or the ones that go on for longer than you could’ve reasonably expected.

How much do these cost you? A lot of it depends on the size and configuration of your network, how quickly your provider handles them, and whether or not your site stays up and functioning during the outage. But you can still arrive at a decent approximation.

Netblazer has an Internet Outage Cost Calculator that’ll do it for you if you plug in some variables. But For those of you who prefer to calculate it manually, or just want to know how it’s done, the easiest way, according to DVI Consulting, is to assign a dollar value to each business area impacted by the outage. And UC Berkley’s Dave Patterson published this detailed chart (warning: comic sans) that lays out how to do this.

First, you’ll need to know the duration of the outage and when it occurred. Next, take your site’s income per quarter and divide it by the number of hours in a quarter. (It’s 2,191, for reference.)

First, if the outage knocked your site out, multiply that last number by the number of hours it was down. That’s how much you’ve lost in pure sales.

Next, if the outage occurred during work hours and employees were forced to stop, figure out how many were unable to do their jobs and whether they remained on the payroll during the outage. If so, add in all their hourly salaries. Did it cost you anything to collect all that information? And what about the repairs? Add those in too.

Steep, isn’t it?

When Amazon went down last year, it cost them over $66k per minute. Chances are, your business won’t hemorrhage anywhere near that much cash, but it’s all proportional. Even though you might lose a smaller dollar amount, it could cost you more relative to what you make. Outages lasting days can even bankrupt a small business.

And even worse, this is a conservative estimate, as there’s often no way to account for certain costs, especially ones that may or may not have occurred. Did you lose any offline sales, as well? For example, if you have a brick-and-mortar store and the internet outage made you unable to process credit cards, did you lose those sales?

If you have a package deal and your phones went out as well, could you have missed some customer service inquiries, or a call from a vital client?

And there are some losses that can’t be quantified at all. For example, will too-frequent website outages cause customers to assume your products will be just as unreliable? (This is especially a problem if you sell anything electronic.) Could they cause a loss of employee trust in your IT department? Could you have missed that one-in-a-million customer while your website was down?

Loss Prevention

Don’t panic, though. There are ways to minimize the damage.

First, resolve to take disaster preparedness seriously. Look into establishing a comprehensive disaster recovery plan. 56% of North American businesses don’t have one, so you’ll be putting yourself ahead of more than half the competition. If you’re big enough to have an IT department, they can handle it. If not, here’s a good place to start.

Next, offload online services like email and web hosting to a certified datacenter that will remain online during a local outage. All data centers with SSAE16-certifiication feature advanced fire suppression systems, uninterruptible power supplies, and ready-to-go backup generators in case of emergency, all in strictly temperature-controlled environment that guarantee your site will stay up through the worst of times.

And finally, consider investing in an ISP that guarantees uptime and responds to outages quickly… For example, one with a 99.99% uptime guarantee, built-in failsafe technology—including entire backup circuits—and response times of less than an hour, like vUnity.

 

vUnity

Having to buy an internet connection that costs more than the savings doesn’t. This was the problem for California based Zuit

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